All About The Insurance Sector In India

The Indian insurance sector includes 58 Indian insurance companies; under these, 24 companies are running a life insurance business, and 34 companies are for non-life insurance. Life Insurance Corporation (LIC) is the only public sector company that provides life insurance. Six other public sector insurers provide other kinds of insurance.

Moreover, there is a sole national reinsurer, known as the General Insurance Corporation of India (GIC Re). The other stakeholders in the Indian insurance market include agents (individuals and corporate), surveyors, brokers, and third-party administrators who serve health insurance claims.

What Is Insurance?

Insurance is a secured policy through which a person can manage their risks. It is a type of protection and security against unexpected losses, like financial or health. Insurance is a contract in which an individual or an organisation receives financial protection and a fixed reimbursement against losses from an insurance company.

Insurance policies are used to secure one against the risk of financial losses; losses can be like property loss or injuries, etc. Insurance can also be called a financial product sold by insurance companies to safeguard an individual or an organisation from unexpected dangers like fire, damage to goods, theft, or an accident.

How Does Insurance Work?

Since we already know that insurance is a type of financial product bought from insurance companies for security, the insurance buyer has to pay a certain regular amount, known as insurance premium, to the insurance company. Whenever any type of loss occurs, the buyer has to claim their insurance from the insurance company to overcome all the losses. Remember that the insurer will receive a payout only for the losses covered under the insurance policy, not for any other loss that is not registered in an insurance policy. 

Types Of Insurance 

• Life insurance: It is a type of insurance policy under which the policyholder can ensure the financial security of their family members after their death.

• Property Insurance: This type of insurance safeguards an individual or organisation’s property or immovable structures. If any damage occurs to these properties, the insurance company will compensate for it when the policyholder claims it.

• Marine Insurance: It is a type of insurance that helps protect and cover the loss of transportation of goods through ships or any damage to the ships, cargo, or terminals.

• Fire Insurance: This type of insurance policy covers the losses incurred through fire in an individual or an organisation’s property or goods.

• Liability Insurance: This type of insurance policy offers security against the losses held in the business, such as sues for negligence, injury, or malpractice.

• Guarantee Insurance: This is a type of insurance policy that secures one against advanced payment or payment on account for services agreed upon in a contract.

• Health Insurance: This type of insurance policy protects against medical expenses incurred during illness.

Indian Insurance Company

The Indian insurance sector has grown significantly in the last decade. This has led to strong competition among Indian insurance companies. The Indian insurance sector plays a major role in the economy’s growth. Indian insurance indulges the habit of saving and investing in individuals, and helps them secure and safeguard their future. The Indian insurance sector contributes a large pool of funds, which are raised through individuals’ savings. 

Investment In The Indian Insurance Sector

• The total insurance inflow in India was at 3.76% in 2019, with life insurance at 2.82% and non-life at 0.94%. In India, the total insurance density was at $78 in 2019-20, life insurance density was $58, and non-life insurance was $19.

• When we count in terms of the size of the Indian insurance sector, the share of life insurance in total premium was 74.94%, and the non-life premium was 25.06% in 2019-20.

• In 2020, Indian life insurance companies issued 288.47 lakh new individual Indian insurance policies.

• Health insurance witnessed a 13.3% growth in GDPI in 2021, whereas fire insurance and liability insurance have grown to 28.1% and 16.4%, respectively, in 2021.

• The insurance regulator, IRDA, took numerous actions toward the Indian Insurance sector, such as boosting the insurance penetration and launching standardised insurance products, allowing insurers to offer rewards for low-risk behaviour. 

• Digital issuance and online channels are continuously contributing to the growth of digital insurance. In 2020-2021, 19% of growth had been observed in digital insurance.

Challenges Faced By The Indian Insurance Company

Since the pandemic, the Indian insurance sector has faced numerous challenges and difficulties.

• Insurers in India lack sufficient capital, especially the public sector insurers. 

• The general insurance industry has also recorded a profit decrease, while the private sector has recorded a slight fall in profits.

Conclusion 

Insurance is a large investment; it helps us be safe, and secure our future from various unexpected dangers. It is essential to understand which type of insurance is to be bought and at what period, and from which insurance company.

In India, the insurance sector has tremendously progressed in the last decade. The Indian insurance sector still has many challenges that it needs to tackle. However, there has been a significant shift toward digital insurance, which has greatly contributed to the growth of the sector.